Resolving Your Debt With a Monthly Payment Plan

If you’re struggling with tax debt, IRS installment agreements can be an effective way to resolve your debt. People opt for installment agreements for many reasons. Some people simply prefer a monthly payment plan, while others would not qualify for an offer in compromise or other forms of tax relief. Keep reading to learn more about installment agreements and how a tax attorney at Midwest Tax Relief might help.

IRS installment agreements, Omaha Nebraska

How Do You Apply for IRS Installment Agreements?

Since 2012, the IRS installment agreement process has been streamlined. If you are up-to-date on your federal income tax filings, you can apply for a monthly payment plan. However, the application process varies depending on how much tax debt you have.

  • $50,000 or less: You can complete a streamlined application and the IRS will let you pay your tax debt over a period of 72 months
  • More than $50,000: You must complete a much more detailed application and negotiate your installment plan with the IRS.

When you calculate your tax debt, make sure you include penalties and interest associated with your tax debt. If you need help determining your eligibility for a streamlined IRS installment agreement and other programs, contact an experienced tax relief attorney at the Midwest Tax Relieftoday.

While you can complete a streamlined application online, requesting a full IRS installment agreement is a more complicated process. You’ll need to fill out a series of forms and provide extensive financial information. Then, your tax attorney will negotiate with the IRS on your behalf and try to establish a fair payment schedule. Sometimes, you’ll have to negotiate back and forth until you arrive at a fair payment plan.

You’re also not guaranteed an installment plan if you have very high tax debt — the IRS will review your request and either approve or deny it. If your request is denied, consult with your tax relief attorney immediately. Depending on your unique circumstances, you might have the option to refile or appeal.

Because so much is at stake, it’s typically in your best interest to consult with a tax lawyer before you submit an application for an IRS installment agreement. For a no-risk consultation, contact the Midwest Tax Relief.

Why Does the IRS Reject Installment Agreements?

If you’re requesting an IRS installment plan for more than $50,000 in tax debt, you’ll have to provide substantial financial information to the IRS. A simple mistake could result in a denied installment agreement. The IRS might deny your request for an installment plan for the following reasons:

  • You defaulted on IRS installment agreements in the past
  • You gave them incomplete, vague, or inaccurate information
  • They think your living expenses you listed in your application are extravagant

If your IRS installment agreement is denied, consult with your attorney immediately. Your lawyer can review your denial and help you understand the IRS’ rationale and your next steps.

How Do IRS Installment Agreements Work?

Once the IRS agrees to an installment agreement, you must make all of your payments on time and meet other obligations. They include keeping up-to-date on your income tax filings and paying your future tax bills on time. Additionally, if you receive a federal income tax return, you’ll have to use it to pay your tax debt.

When you make your monthly payment, you’ll typically send the IRS a check, money order, or submit a electronic payment through your bank or credit union (sometimes called “direct debit”). You can also arrange for the IRS to make payroll deductions from your paycheck. Sometimes, people are concerned about giving the IRS their bank account information or would rather not tell their employer about their tax debt. If you need help understanding your payment options, consult with a tax relief attorney.

You also need to take your payment obligations seriously. The government imposes serious penalties on people who default on IRS installment agreements. A late payment might result in the cancellation of your installment plan, additional fees, penalties, and enforcement actions such as tax liens and levies. The IRS can also revoke your installment agreement if your financial situation improves or it discovers that you provided inaccurate information when you requested an IRS installment agreement.

However, if the IRS rescinds your installment plan, you have the right to appeal this decision. If you’re considering an appeal, you should strongly consider hiring a tax lawyer to assist you.

IRS Installment Agreements Aren’t Always Your Best Option

While many people benefit from IRS installment agreements, they aren’t for everyone. First, when you enter an installment agreement, you have to agree to pay a variety of IRS fees, penalties, and interest, which continue to accrue until you’ve paid your last monthly payment. Sometimes, the IRS’ interest rates are higher than a traditional lender’s rates.

Second, while you’re in an installment plan, the IRS can still file tax liens against your property. A tax lien asserts a legal interest in your property, limiting your ability to sell or refinance valuable property. However, the government typically cannot levy or seize your property while you are making installment payments.

Finally, there are situations where you would be better off requesting a different form of tax relief, such as an offer in compromise. At the Midwest Tax Relief, we carefully assess and educate our clients about all of their tax relief options.

Request a Consultation and Learn More About IRS Installment Agreements

At Midwest Tax Relief, we assist individuals and families with IRS installment agreements and other tax relief matters. We treat all of our clients with respect and work closely with them to resolve their tax debt and rebuild. If you’re struggling with significant income tax debt, contact us for a free and confidential evaluation. We’ll listen to your story, educate you about your legal options, and give you practical advice.